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Having purchased US$5.1m worth of Independence Contract Drilling, Inc. (NYSE:ICD) stock, the recent 19% pullback is not what insiders may have expected

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The recent price decline of 19% in Independence Contract Drilling, Inc.'s (NYSE:ICD) stock may have disappointed insiders who bought US$5.1m worth of shares at an average price of US$3.40 in the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth US$4.8m, which is not what they expected.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Independence Contract Drilling

Independence Contract Drilling Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider William Monroe for US$2.8m worth of shares, at about US$7.81 per share. That means that even when the share price was higher than US$3.20 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. William Monroe was the only individual insider to buy during the last year. Notably William Monroe was also the biggest seller.

William Monroe purchased 1.50m shares over the year. The average price per share was US$3.40. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
insider-trading-volume

Independence Contract Drilling is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does Independence Contract Drilling Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Independence Contract Drilling insiders own about US$7.4m worth of shares. That equates to 17% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Independence Contract Drilling Tell Us?

The fact that there have been no Independence Contract Drilling insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Independence Contract Drilling and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 5 warning signs for Independence Contract Drilling (2 are potentially serious) you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.